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Life Health > Life Insurance

2Q 2004 Variable Life Up 21% Over Last Year

By Geraldine Murtagh

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Variable life experienced a moderate upturn in sales in the 2nd quarter of 2004 compared to the 1st quarter, perhaps further indicating a stabilization of the variable life market.

VL sales with single premiums included at 10% for the 44 companies reporting in the VALUE survey for 2nd quarter 2004 were $693 million. This is almost a 5% increase over 1st quarter 2004 sales, which were $661 million, and a 21% increase over 2nd quarter 2003 sales, which totaled $571 million.

Sales for the first 6 months of 2004 at $1.354 billion were 13% higher than the first 6 month sales in 2003, which totaled $1.197 billion.

(Sales include first-year annualized premium, drop-in premiums and 10% of single premiums.)

The market estimate for the first 6 months of 2004 with single premiums included at 10% is $1.4 billion.

VL sales with single premiums included at 100% for the 44 companies in the VALUE survey for 2nd quarter 2004 were $708 million. This is a 4% increase over 1st quarter 2004 sales, which were $678 million, and a 20% increase over 2nd quarter 2003 sales, which amounted to $589 million.

The market estimate for the first 6 months of 2004 with single premiums included at 100% is $1.475 billion.

For the first 6 months of 2004, the top 5 companies/fleetsPacific Life, IDS, Hartford Life, AXA Financial/MONY and Nationwidecaptured 41% of all VL sales (including single premiums at 10%), while the top 10 companies/fleets garnered 65% of VL sales. The aggregated market share for both the top 5 and top 10 companies increased slightly due to the merger of Manulife Financial and John Hancock and the acquisition of The MONY Group by AXA Financial.

For the companies in the survey, the number of flexible-premium contracts issued during the first 6 months of 2004 increased 21% over the number issued during the first 6 months of 2003. The average face amount increased 12% to $338,184, while the percentage of premium allocated to the general account decreased to 6%.

The single-premium variable life market continues to suffer. The total premium for single-premium products for the 6 companies in VALUE for the first 6 months of 2004 was $25 million, compared to $33 million for the first 6 months of 2003.

The number of single-premium contracts issued during the first 6 months of 2004 was 25% lower than the number issued during the first 6 months of 2003. The average face amount decreased 4% to $140,583, while the average premium increased 2% to $60,732.

The total premium from all second-to-die products issued during the first 6 months of 2004 for the companies in the survey was $167 million, compared to $143 million during the first 6 months of 2003.

The number of second-to-die contracts (including single-premium and flexible-premium products) issued during the first 6 months of 2004 increased 17% over the first half of 2003. The average face amount increased 26% to $2,621,518.

For the companies reporting sales by distribution channel for the first 6 months of 2004, career agents and independent broker-dealer firms dominated flexible-premium variable life sales, capturing 45% and 43% of the market, respectively.

Career agents also dominated single-premium variable life sales in the first half of 2004, capturing 51% of the market. Independent broker-dealer firms and regional firms captured 25% and 20% of the market, respectively, while wirehouses had 4%.

As of June 30, 2004, total variable life assets for the companies reporting in VALUE were $99.3 billion, up 13% from $88 billion on June 30, 2003. Of the total assets reported, 91% were held in a separate account.

VALUE classes funds into the following categories: growth, aggressive growth, growth and income, international stock, government bond, corporate bond, high-yield bond, international bond, money market, balanced and specialty (e.g., gold, real estate).

As of June 30, 2004, approximately 77% of the variable life separate account assets were in stock funds; 9%, bond funds; 6%, balanced funds; 5%, money market funds; and 2%, specialty funds.

Fixed account interest rates on VL policies continue to decrease. The average one-year interest rate on June 30, 2004, was 4.5%, down from 4.62% on March 31, 2004. The average renewal rate on June 30, 2004, decreased to 4.52% from 4.63% on March 31, 2004.

, CLU, ChFC, is with Tillinghast-Towers Perrin.

Reproduced from National Underwriter Edition, September 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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